Banks use employment contracts as flex in hiring wars
As banks battle ongoing attempts to poach their best staff, a new weapon has arrived on the battlefield: some headhunters in London say banks have begun using hedge fund-style non-disclosure agreements during the hiring process.
Senior staff who receive job offers from rival banks are reportedly being asked to sign agreements stating that they won't disclose the nature of the new offer or the bank making it. The NDAs are intended to make it harder for current employers to make counter offers as they don't know what rivals are up to.
"NDAs are being used a lot more regularly, especially at the senior level," says one headhunter. "They're not just about job offers, but apply to the structure of the business, client marketing plans and potentially sensitive data."
Funds have always used NDAs, but they're now spreading to banks too, he adds.
The move comes after counteroffers have been widespread in the banking market in 2021, with Credit Suisse especially said to have offered substantial pay increases to stop people leaving. One exiting trader described his recent resignation from the Swiss bank as a "painful" process.
However, lawyers caution against adhering to NDAs from hiring firms if they contradict existing employment contracts. "A lot of banks' employment contracts contain a clause requiring employees to disclose the identity of any company that offers them employment," says Dan Begbie Clench at law firm Doyle Clayton. "It's usually part of the restrictive covenant clauses."
If you're offered a new job, you may therefore be contractually obliged to divulge certain details to your current employer. In some cases, Clayton says this can apply even if you don't take the job offer any further. - One JPMorgan MD's strategy of collecting job offers simply to benchmark pay, may not be a good idea after all.
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